Why Bitcoin is shy about $100,000
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Bitcoin's dramatic post-election rally took it within a few hundred dollars of $100,000 on Nov. 22, but since then it's lost most forward momentum.
Why it matters: $100,000 BTC might be one of the most psychologically important prices in the history of cryptocurrency, and the suspense has kept some traders waiting for years.
Between the lines: "While we expect a struggle to break the psychological $100K price point, medium-term momentum remains encouraging," Ravi Doshi, head of markets at crypto prime brokerage FalconX, tells Axios.
A couple of forces are at play. A big one is profit taking.
- "Our OTC desk saw significant profit taking as we approached $100K," Doshi said.
- Today's prices means nearly every BTC that anyone has ever purchased is in the green, so lots of folks are either cashing out or feeling the temptation to do so.
Meanwhile, traders have a way of clustering around a certain price. Big round numbers are going to be attractive for arbitrary sell targets.
- One exchange, OKX, sent a statement to Axios saying they have one standing order to sell 1,000 BTC at $100,000, whenever someone is willing to take it.
- There's likely a lot of similar orders out there.
This turns into a game of chicken, as other traders intent on cashing out know there's likely to be a sell-off at a key price. They will try to sell as close to that price as they can, so they don't get stuck selling lower if a sell-off hits.
By the numbers: A new report from Glassnode demonstrates just this clustering effect. As BTC has neared the $100k mark, 507,000 BTC that had been sitting dormant for months have started moving.
- Something similar (though much bigger) happened as BTC came out of its 16-month funk and broke its all-time high in March. Then, 934,000 BTC woke back up as it got close, showing how bitcoiners tend to gather around historically important price levels.
- Traders moving BTC now are likely doing it with a price in mind for selling each bitcoin, though some of those prices could be well above $100,000.
Nevertheless, Bitcoin $100k has always been special.
Flashback: Markets reporting often talks about traders having "eyes on" a price metaphorically, but in the case of bitcoin, it has been very nearly literal.
- X has been the town hall of crypto for years, and in 2021, during the last big rally, bitcoiners started modifying their avatar photos with laser eyes and tweeting the change with #LaserRayUntil100K.
- They were disappointed. That rally fell a little over $30,000 short of the mark, but they are finally getting oh so close at long last.
The bottom line: The market gets shy around any key level, but a lot of people have wanted bitcoin to reach this one for a long time — if only for the schadenfreude.
